Enhancing Shareholder Value through Corporate Social Responsibility Disclosure in a Developing Country

Chaudhry, Asim; Ramakrishnan, Suresh; Sulimany, Hamid Ghazi H; Sharif, Ayesha

doi:10.25115/eea.v39i4.4315

Cited by 3 publications

(2 citation statements)

References 27 publications

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“…Therefore the aforementioned scenarios suggest that corporate social responsibility is an additional investment strategy for boosting the performance of corporate institutions. Many companies engage in CSR to fulfil stakeholders' expectations (Chaudhry et al, 2021).…”

Section: Introductionmentioning

confidence: 99%

Corporate Social Responsibility and Value of Industrial Goods Manufacturing Firms in Nigeria

Inyang,

Joel,

Ubi

et al. 2023

J. Professional Business Review

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Purpose: The aim of this study is to determine how corporate social responsibility (CSR) practices can influence the corporate performances of listed firms in the industrial goods producing sector of Nigeria and other developing countries. Theoretical Framework: The enhancement of corporate value by CSR practices has become an interesting area of study for corporate managers and policy makers globally. The Stakeholder and Business Ethics theories have been used for this study. However, we anchor this research on the stakeholder theory which Edward Freeman propounded in 1984 and use it to evaluate the influence of CSR on corporate value. Design/methodology/approach: The study uses the causal comparative research design and we purposively select a sample of four industrial goods firms from Nigeria’s listed manufacturing enterprises as at 31st December, 2021 based on their social responsibility relationships with the society, employees and creditors. We collect 19 years secondary data from the website of the Nigerian Exchange Group and yearly financial reports of the industrial goods producing enterprises. These data have been analysed using the ordinary least squares panel data regression, fixed and random effects models, stationarity test, cross-section dependence test the Hausman test. Findings: The results show that corporate giving, employee welfare package and creditor days have significant positive effects on return on assets (a proxy of corporate performance) suggesting that the threat to profit-maximization is not caused by CSR but by illegitimate use of CSR by rent-seeking corporate managers. Research, Practical & Social implications: The study helps in filling the gap in literature and serves as basis for the economic and social development of Nigeria, developed and other developing countries through a more legitimate CSR investments in corporate giving, employee welfare package and creditor settlement days. Originality/value: The value of the study is that evidence of CSR success in the industrial goods manufacturing sector has for the first time been established using a time scope of 19 years and a firm-year-observations of 228. This study supports the claim that CSR is not a threat to profit maximization since it has a strong relationship with corporate value.

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Section: Introductionmentioning

confidence: 99%

Corporate Social Responsibility and Value of Industrial Goods Manufacturing Firms in Nigeria

Inyang,

Joel,

Ubi

et al. 2023

J. Professional Business Review

View full text Add to dashboard Cite

show abstract

“…wealth. In corporate practices and academic literature, CSR has been accorded a wider recognition and vigorously accepted and companies engage in it to fulfil stakeholders' expectations (Chaudhry, Ramakrishnan, Sulimany & Sharif, 2021). Furthermore, the influence of companies' economic activities on society and environment has made the world to focus on corporate social responsibility practices (Relaiza et al, 2023) and this global realization of the importance of this research area has resulted in 'Social Responsibility Journal' being recently declared as the most productive Journal (Yazdani et al, 2022).…”

Section: Introductionmentioning

confidence: 99%

Corporate Social Responsibility and Shareholders’ Wealth of Industrial Goods Producing Companies Listed on the Exchange Group PLC of Nigeria

Inyang,

Joel,

Obeten

et al. 2023

J. Professional Business Review

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Purpose: The purpose of this study is to determine how the practices of corporate social responsibility (CSR) influence the wealth of shareholders of industrial goods producing companies listed on the Exchange Group Plc of Nigeria and other developing countries. Theoretical Framework: The role played by CSR practices in enhancing shareholders’ wealth has attracted the interests of companies’ executives and policy makers all over the world. The theoretical foundations of this research work are provided by the Shareholder Value Theory, the stakeholder theory, the Business Ethics theory and the Agency theory. However, this work is anchored on the shareholder value theory propounded by Milton Friedman in 1970 and this is used to evaluate the influence of corporate social responsibility on shareholders’ wealth. Design/methodology/approach: The study uses the ex-post facto research design and judgemental sampling technique to select a sample of 10 industrial goods producing firms listed on the Nigerian Exchange Group Plc as at 31st December, 2021. Social responsibility relationships with the society, employees, suppliers, customers, tax authorities and lenders provide the basis for sample selection. Information from the financial statements of the sampled companies was used to compute weighted average cost of capital (WACC), rate of stock turnover, actual corporate tax rate, invested capital, leverage, return on equity (ROE), value of debts and value of equity. This approach facilitates the computation of economic value added (EVA) which is used as proxy for shareholders’ wealth. Firm-year observations of 1,840, ordinary least squares panel data regression, fixed and random effects models, stationarity test, cross-section dependence test and the Hausman test are used for data diagnosis and analysis. Findings: The research has disclosed that CSR to society positively and significantly influences shareholders’ wealth while CSR to suppliers and lenders have non-significant positive effect on shareholders’ wealth. Contrastingly, it is further revealed that CSR to employees and tax authorities have significant negative effects on shareholders’ wealth while CSR to customers negatively and non-significantly influences shareholders’ wealth. Research, Practical & Social implications: The implication for managers is that CSR relationship with society is value enhancing in Nigeria’s industrial goods sector while CSR relationships with employees and tax authorities are value destroying. Value enhancing results of the dealings with suppliers and lenders and the value destroying result of the dealings with customers lack sufficient evidence. This research has helped in filling the gap in the existing literature and in serving as the basis for the economic and social development of Nigeria and other developing and developed countries of the world. Originality/value: This is the first time in the industrial goods sector that we are associating four new corporate social responsibility variables namely, CSR to suppliers, CSR to customers, CSR to tax authorities and CSR to lenders with shareholders’ wealth. This study encourages the revival of CSR to employees and CSR to tax authorities which are currently value destroying in the industrial goods sector of Nigeria.

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Meta-Frontier Analysis of Disclosing Sustainable Development Information: Evidence from China’s AI Industry

et al. 2021

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China currently adopts voluntary principles to disclose sustainable development information, and so considerable numbers of listed companies have chosen not to disclose such information. Since disclosure and non-disclosure groups face different production opportunities, this research uses the meta-frontier framework to completely analyze sustainable development practices of China’s artificial intelligence (AI) industry. Empirical results show that the disclosure group outperforms the non-disclosure group in operating scales, efficiencies, and technologies, while the superior efficiency of state-owned enterprises (SOEs) comes entirely from the non-disclosure group. Hence, the government should mandate or actively encourage capable corporations, especially SOEs, to disclose sustainable development information, as doing so improves the overall sustainable development of society and also enhances these firms’ performance. Finally, the authority can formulate a nationwide disclosure policy regardless of the existing differences in regional development.

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Enhancing Shareholder Value through Corporate Social Responsibility Disclosure in a Developing Country

Cited by 3 publications

References 27 publications

Corporate Social Responsibility and Value of Industrial Goods Manufacturing Firms in Nigeria

Corporate Social Responsibility and Value of Industrial Goods Manufacturing Firms in Nigeria

Corporate Social Responsibility and Shareholders’ Wealth of Industrial Goods Producing Companies Listed on the Exchange Group PLC of Nigeria

Meta-Frontier Analysis of Disclosing Sustainable Development Information: Evidence from China’s AI Industry

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